Abstract
November 1997 saw unprecedented failures of Japanese financial institutions as Hokkaido Takushoku Bank and Yamaichi Securities went into bankruptcy. This prompted risk-averse households to shift deposits from banks perceived to be in trouble to safer banks. The increase in the level of deposits during December, compared to the previous year, was 6.2% for postal savings, 4.7% for city banks and only 1.6% for first-tier regional banks. Second-tier regional banks had a decline in deposits of 2.1 %. Many argue that quick shifts of deposits, together with a fall in share prices, make banks very cautious in making loans or, even worse, lead them to withdraw loans to maintain capital requirements. It is further asserted that a contraction of bank credit in turn chokes off the real activity of bank-dependent firms and thus aggravates the current stagnancy of the Japanese economy.
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Ogawa, K., Kitasaka, SI. (2000). Bank Lending in Japan: Its Determinants and Macroeconomic Implications. In: Hoshi, T., Patrick, H. (eds) Crisis and Change in the Japanese Financial System. Innovations in Financial Markets and Institutions, vol 12. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-4395-4_7
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DOI: https://doi.org/10.1007/978-1-4615-4395-4_7
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